Universities warned of sharp funding cuts

Universities have been warned that they face sharp cuts in funding next year
and fines for recruiting too many teenagers.

By Robert Winnett, Deputy Political Editor

7:00AM GMT 23 Dec 2009

Students may also be forced to sit “fast-track” two-year degrees under draconian plans to cut costs with a reduction in teaching budgets.

Lord Mandelson, the Business Secretary who oversees higher education, told universities that they face a £135 million cut in funding in 2010.

Universities will be fined more than £3,000 for each student they recruit over the Government target. He also put the top universities on notice that he expects to unveil new plans to force them to recruit more students from poorer backgrounds before the next election.

The cutbacks were disclosed in a letter sent yesterday to Tim Melville-Ross, the chairman of the Higher Education Funding Council for England (HEFCE).

It signals the widespread cuts being planned throughout the public sector despite Government denials that frontline services are being targeted.

Lord Mandelson was accused of trying to bury the bad news by sending the letter during the Christmas break for MPs and universities. The Conservatives said that the annual letter is usually sent in mid-January.

David Willetts, the shadow universities and skills secretary, said: “This is very bad news for Britain’s universities with fines for taking on extra students and a very tough spending regime. The Government is hoping to smuggle this announcement out at Christmas when no-one will notice.”

University leaders warned that the cutbacks threatened the quality of higher education in this country. Professor Steve Smith, the president of the vice-chancellors group at Universities UK, said: “The higher education sector recognises the current pressures on public spending and is playing a key role in tackling many of the long-term challenges facing the economy.

“The sector will not be able to deliver more with less without compromising our longer-term sustainability and international competitiveness. The government must avoid sacrificing the long-term interest in favour of short term aims.”

“We want to see more programmes that are taken flexibly and part-time and that a learner can access with ease alongside their other commitments,” he said. “We also wish to see more programmes such as foundation and fast-track degrees, that can be completed full-time in two years.”

The letter announces cuts of £135 million to universities budgets for next year.

This is on top of the £600 million efficiency savings to be made from 2012, which were announced in the Pre-Budget report earlier this month.

The total teaching budget for universities will be cut from £5,079 million this year to £5,027 million in 2010-11. In real terms, funding per student has fallen from £4,140 in 2007-08 to £3,950 next year.

Lord Mandelson said the cuts need to be made to pay for the “higher than expected cost” of funding grants and loans for the record number of students going to university during the recession.

The cutbacks are likely to increase pressure on the Government for top universities to be able to charge their own fees. An official review is currently considering lifting the cap on tuition fees after the next election. Some universities wish to charge students more than £7,000 a year - compared to £3,225 currently.

Sally Hunt, general secretary of the University and College Union said: “You cannot make these kinds of cuts and expect no consequences.

“We will see teachers on the dole, students in larger classes and a higher education sector unable to contribute as much to the economy or society.”

Wes Streeting, president of the National Union of Students (NUS), added: “The news that the government will not repeat its extra expansion of university places in 2010 despite a continued rise in applications and a proven youth unemployment crisis, will sound chimes of doom for existing students in cuts-hit universities and for talented school leavers set to fail to secure a university place.”